How disruption is driving change for hotels

From the likes of Airbnb to growing competition in the food and beverage space, disruptive forces are striking the hotel industry from all angles.

December 15, 2017

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Yet this is far from being a bad thing, Arthur Adler, Chairman of JLL’s Hotels & Hospitality Group – Americas, believes. Instead, disruption is driving innovation across the industry as hotel brands and operators implement new concepts to improve their offerings and keep their guests coming back for more.

“The guest experience and profitablility is really what’s driving all of this innovation,” says Adler. “As travelers’ preferences for their lodging changes, the hospitality industry will follow suit to make sure both guests’ needs are being met and that the real estate is efficient and profitable for ownership.”

Disruptive forces at work

It’s no secret that alternative accommodation providers are disrupting the hospitality sector—but they’re far from being the only ones. “The lodging industry is also affected by workplace transformation like co-working spaces and innovations in food and beverage services,” says Adler

According to JLL, home rental and alternative accommodation providers account for just 3 percent of room nights in terms of total market share—a number expected to increase to 5 percent by 2025. Moreover, in October 2017, Airbnb announced plans to work with developers on branded apartment buildings across the US, creating novel properties that fuse residential facilities and hotel amenities.

Hotel brands, in turn, have noted the growing popularity of the sharing economy and have adapted their designs accordingly. Some properties are transforming meeting room facilities into co-working spaces while others are introducing more shared spaces and common areas, which give guests opportunities to meet new people and mingle with other guests.

Some hotels are even launching niche brands with specific offerings in order to reach different types of travelers, including those attracted to the experience offered by Airbnb. Marriott’s Moxy and Accor’s Jo&Joespinoffs are aimed at a Millennial demographic, focusing on local connections and shared experiences over more traditional products and amenities.

“Nowadays the property is not just a place to sleep; it becomes a destination in and of itself,” Adler says.

Playing the disruption game

Disruption is encouraging hotels to find opportunities to add value in their current models. Unprofitable food and beverage operations such as room service are being replaced by more modern options such as ‘grab-and-go’ offerings or partnerships with local brands to provide their products in-house.

“It’s a good solution for all,” says Adler. “Hotels have the option to provide food delivery without the high cost of producing it themselves and guests get a local food experience.” Some brands are taking the guest benefits a step further; InterContinental Hotels Group members, for example, are able to accrue loyalty points by ordering food via Grubhub or making dinner reservations through OpenTable.

Emerging technology is also playing a big role in helping hotels to operate more efficiently and enabling guests to have a smoother stay. “Hotels are in a position where they can incorporate new technology into their offerings to take their spaces and services to the next level,” says Adler.

A growing number of hotels are employing chatbots to enhance aspects of the customer journey, from the reservation stage to on-resort interactions. In Japan, guests at the Holiday Inn Osaka Nanba are now served by an AI concierge, which can perform tasks such as booking restaurants and recommending activities.

In addition, brands are looking to use new technology to improve their digital presence and improve guest loyalty, by encouraging direct bookings and offering exclusive, members-only experiences.

A promising outlook

While the digital world continues to evolve and pose new challenges for hotel brands, the travel industry remains all about the real world. “It’s experiential. You can’t virtually stay in a hotel, go to a resort, go on a safari without actually going and doing it,” Adler says. “People value those experiences – and disruption encourages the hotels industry to consider new ways we can meet and exceed travellers’ expectations.”

Through a focus on unique experiences, local culture and the smart use of technology, hotel guests today have the opportunity to engage more deeply with a destination, as well as with the hospitality brand itself.

And that’s something that’s set to continue well into the future. “There will always be demand for hotels, so hoteliers will have the opportunity to innovate for years to come,” Adler concludes. “Hotels looked very different 50 years ago than they do today, and the next 50 years will bring about even more change.”